Oxford Street is leading the recovery

Published: 23 August 2013

Updated: 12:20, 23 August 2013

Today's prediction that this year’s Oxford Street sales figures will break the £5 billion barrier reflects a mood of increasing economic optimism in the capital. The New West End Company says the post-Olympic tourism boom and a variety of improvements to the street and shops are driving remarkable growth. That is certainly the way Oxford Street and the rest of the West End feel at the moment, packed as they are with tourists.

But there are other signs of growth in London too at present: a significant acceleration of house prices, as well as today’s revision upwards to 0.7 per cent of the official growth figures for the second quarter of this year. Indeed the rise in house prices and in mortgage lending has brought warnings this month of the dangers of a new property bubble, encouraged in part by the Government’s Help to Buy scheme.

We should keep this growth in perspective. Aside from the potential instabilities of the property market, this is still a very weak recovery by historical standards, as Bank of England Governor Mark Carney noted earlier this month when he predicted that interest rates would probably stay unchanged until at least 2016. The Bank has revised its growth forecasts upwards but it still thinks the economy will manage only an anaemic 1.4 per cent this year (and a more encouraging 2.5 per cent next).

Still, London’s recovery has been smarter than that, as today’s Oxford Street prediction suggests. London was always likely to lead the nation’s economic turnaround, and so it is proving. After five years of hard times, that is welcome news indeed

HS2 under fire

Alistair Darling’s intervention today in the controversy over HS2 will come as a blow to the high-speed rail scheme’s proponents. As Transport Secretary and then Chancellor in the Labour government, Mr Darling backed the new line from London to Birmingham and the North. But writing in the Times today, he says the ballooning costs of the scheme now make it the wrong choice and that the money would be better spent on other transport infrastructure projects. In June it was revealed that projected costs have soared by almost a third, to

£42.6 billion, while earlier this week one think-tank predicted that the eventual total could reach £80 billion.

Mr Darling was one of the most capable chancellors of recent years, a low-key but very sensible and sure-footed performer: ministers should heed his warning. The case for needing HS2 to meet increased demand is unproven. The business argument for it is weak: the ratio of cost to benefits is remarkably low compared with most transport infrastructure projects, such as Tube upgrades.

As Mr Darling notes, the Department of Transport’s entire annual capital projects budget is around £9 billion: spending more than £40 billion on one project is a rash move. Commuter rail services in the South-East and elsewhere are crying out for improvement, while our airport capacity is under strain. Ministers should scrap HS2 and spend the money elsewhere.

Holiday city

Much of London appears to be on the move today as people hurry to get out of town for the bank holiday weekend. But those who stay can enjoy a less crowded capital — except perhaps in Notting Hill, where Carnival will bring its annual explosion of noise and colour. Whether lying on the beach or dancing in the streets, we hope all our readers enjoy the long weekend.